As Somalia starts to emerge from instability and chaos, 20 years of
relative peace and stability are starting to pay dividends for its close
This November, it struck its first major oil deal since seceding from
Somalia in 1991. Anglo-Turkish company Genel Energy received its license
from the Somaliland government in early November to explore and develop
oil and gas reserves after pledging almost $40 million for exploration
The independent oil and gas exploration and production company has
become the first foreign investor to commit a significant amount of
capital to the country’s energy sector, after initial investigations
demonstrated “numerous oil seeps” confirming “a working hydrocarbon
system,” a statement from Genel said.
Genel Energy, headed by erstwhile BP CEO Tony Hayward, is due to start
exploration before the end of the year.
The driving force of this Horn of Africa nation’s economy has
traditionally been livestock. With a livestock population that triples
the 3.5 million civilian population, the livestock trade generates up to
65 per cent of the country’s GDP, Somaliland’s Minister of Planning Saad
With a limited national budget of $120 million the Somaliland government
is now starting to receive much-needed revenue from foreign private
investors to support its development.
Somaliland’s oil and gas reserves attracted the attention of other giant
energy companies such as South African-based Ophir Energy, Jacka
Resources Ltd of Australia, and Petrosoma Ltd, a subsidiary of
British-based Prime Resources — all of whom announced their readiness to
Somaliland has suffered from not being internationally recognized for
the past 21 years. Its unconfirmed legal identity has hindered its
economic prospects — few insurance companies have been prepared to
insure foreign investors here. Subsequently, investors have tended to
regard Somaliland as an economic leper.
For these reasons, the country has also been ineligible for financial
support from the International Monetary Fund and the World Bank.
However, in 2012 Somaliland’s private sector started to progress against
At the beginning of the year, the first UK-Somaliland investment
conference was held to stimulate bilateral trade recognition. And a $17
million Coca Cola plant launched in May by a Djibouti conglomerate made
it the largest private investment in Somaliland since 1991.
Investors are seeing Coca Cola’s decision to have an operation in the
region as a positive statement about the country’s stable business
Somaliland’s Berbera port is also expected to attract major investment
in the coming years. Built originally by the Soviet Union during the
Cold War, the port currently serves as a major gateway for the country’s
livestock exports. There is huge potential for it to be a juncture for
oil and gas exports coming out of landlocked countries like Ethiopia.
The port manager, Ali Omar Mohamed, is enthusiastic about the potential
of expanding the port to make it a regional trading hub between Africa
and the Middle East.
“We are strategically located — Berbera is located in a maritime lane —
30,000 ships pass by our port every year from Europe, the Middle East
and Asia. We can develop Berbera into a major port like Singapore — with
container terminals, free zones, oil refineries, and services related to
maritime business,” Shire said.
Source: East African Nation